FERC and NERC Issued Final Report on the 2021 Winter Freeze

Troutman Pepper

Troutman Pepper

On November 16, 2021, staff from FERC, the North American Electric Reliability Corporation (“NERC”), and certain Regional Reliability Entities issued a final report on the 2021 winter storms that severely impacted the bulk electric systems in Texas and the South Central United States. The report recommended, among other things, strengthening regulations and the grid for cold weather preparedness and enhancing coordination between natural gas and electric systems to prevent winter blackouts.

In February 2021, Winter Storm Uri caused numerous outages and failures to start electric generating plants and caused millions of people to be without heat or power for nearly four days. On February 16, 2021, FERC and NERC announced a joint inquiry with the Regional Reliability Entities, to “examine the root causes of the reliability events that have occurred throughout the county, in particular the regions served by” the Electric Reliability Council of Texas, Inc. (“ERCOT”), Midcontinent Independent System Operator, Inc. (“MISO”), and Southwest Power Pool, Inc. (“SPP”). The final report comes two months after FERC and NERC Staff released their preliminary report and recommendations regarding the 2021 Winter Freeze during the September Open Meeting at FERC. (See September 29, 2021 edition of the WER) In the preliminary report from September, Staff highlighted the role natural gas supply disruptions played in the outages and listed several recommendations for preventing a future disaster. The final report on Tuesday echoed the same conclusions but provided more data and detailed recommendations.

According to Chairman Glick, the report is a “sobering analysis that highlights the significant work that needs to be done” to prepare the electric grid for future cold-weather events. The final report’s main takeaway is that there is a critical need for stronger mandatory electric reliability standards for generator cold weather-critical components and systems. Specifically, the report mentions four types of power plant components that if protected from icing and freezing could have reduced outages by 67 percent in the ERCOT region, 47 percent in SPP, and 55 percent in MISO South. The final report also found that that freezing issues caused 44.2 percent and fuel issues caused 31.4 percent of the unplanned generating unit outages and failures. Notably, natural-gas facilities represented a total of 58 percent of all unplanned outages or failures and the remaining came from wind (27 percent), coal (6 percent), solar (2 percent) and other generating types (7 percent).

The final report includes twenty-eight formal recommendations that seek to prevent another winter blackout and recommends revisions to the NERC Reliability Standards on generator winterization and gas-electric coordination. Some of the recommendations mentioned would require generator owners and/or operators to: (1) identify and protect cold weather-critical components; (2) build new or retrofit existing generating units to operate to specific ambient temperatures and account for effects of precipitation and wind; (3) perform annual training on winterization plans; (4) develop corrective action plans if freeze-related outages have been experienced in the past; and (5) provide balancing authorities with the percentage of the total generating unit capacity that can be relied on during local forecasted cold weather. Additionally, the final report recommends that generator owners be compensated for the costs of retrofitting their existing units or designing new units to withstand cold weather. Lastly, because of the interdependencies between gas and electric sectors that came to light and the vulnerabilities of natural gas infrastructure that were exposed during the winter storms, the report urges Congress, State legislatures, and regulatory agencies to require natural gas facilities to implement and maintain cold weather preparedness plans.

The full report is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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